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11:40
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Originally posted by Nccc:
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Scarpa posted this on LTR thread so i hope he dosnt mind me posting here on GTR thread as it is so relevant to GTR. it is a fantastic post. I mean WES bought KDR and Albermale Wodgina because they thought they would be mining it much earlier than what they now are likely to be mining it - hence why both overpayed in hindsight noting they have both now delayed decisions to mine, noting WES just took a massive impairment on its accounts for its failed UK purchase as well (because profitability it thought it would get on purchase did not transpire to what it actually got). Look at the problems Tianqi is in with its purchase of SQM. As I said, BHPB is sitting on hundreds of years of iron ore, yet its SP is based on a multiple of about 20 times P/E ratio based on its current profitability as projected to the following year (given how discounting works). If it was valued on inground value its SP would be worth multiples of what it is today. This inground value thing people talk about on here and other stocks is really because IMO many have a view LTR (or their stock) will be taken over in the next few months, and bingo the TO price will be 6 to 10 times today's SP (notwithstanding most TO occur at twice last published SP by teh way on day of TO offer). I am sure when LTR get an Offtake with either a Chinese or European player the discussion around inground value on here will go away from those talking about it on these threads. And given how FIRB is saying no, you can discount a foreigner in that regard in any TO scenario, as well? There are a number of exploration plays on the ASX that yabber inground value and claim they have significant resources, yet the market values them as exploration plays. Why - well they are saying show commerciality, show profitability (by way of a DFS) and show you have binding Offtake Agreements that indicate that profitability is there and that it will transpire in timely manner and entry to market is there (noting impacts of discounting on cash flow) . Because those exploration companies don't have these, they move discussion to inground value which has little value in pricing an exploration play, IMO.Even the latest valuation report here has a perception around market entry, not inground value that is unrelated to market entry. It also has a perception/assumption around opex cost (read profitability) as well, but the studies will need to show that perception is a reality. I'll put it this way, if the market felt LTR's resource was uneconomic to mine SP would be less than 1c. The fact the market is pricing it where it is now - based on MC - suggests they think it is potentially economic to mine but more data is needed before they increase the MC further. We can agree to disagree. All IMO
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Its a great post.
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